EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into and effective this 16th day of
September, 1995 by and between NATIONAL AUTO FINANCE COMPANY L.P., a Delaware
limited partnership with its principal offices located in Boca Raton, Florida
(hereinafter referred to as the "Limited Partnership") and XXX X. XXXXXX, with
an address at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxx, XX 00000 (hereinafter referred to
as the "Employee").
WITNESSETH
WHEREAS, the Limited Partnership currently employs
Employee as its President;
WHEREAS, the Limited Partnership wishes to reduce to
writing the terms and conditions of its employment of Employee;
and
WHEREAS, Employee wishes also to reduce to writing the terms
and conditions of his employment by the Limited Partnership.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and obligations contained herein, and intending to be legally bound,
the parties hereto agree as follows:
1. Employment and Term. The Limited Partnership hereby
employs Employee and Employee hereby accepts employment with the Limited
Partnership as its President. The term of such employment shall begin on the
effective date hereof and end on December 31, 1998, unless sooner terminated as
provided in Section 10 herein (the "Term").
2. Duties. During the Term, Employee shall in his capacity as
President, serve the Limited Partnership faithfully and to the best of his
ability and devote such time to the business of the Limited Partnership,
subject to the provisions of Section 3 herein, as (i) is necessary to carry out
the duties and responsibilities customarily incident to such positions,
including, without limitation, the supervision of the other executive officers
and employees of the Limited Partnership who are subordinate to Employee and
(ii) may be reasonably assigned to him from time to time by the Board of
Directors or Chairman, Chief Executive Officer, and/or President, if any, of
National Auto Finance Corporation, the general partner of the Limited
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Partnership (the "General Partner"), or by the Chairman, and/or Chief Executive
Officer, if any, of the Limited Partnership. Employee shall report to the Board
of Directors and Chairman, and Chief Executive Officer, if any, of the General
Partner, and to the Chairman and/or Chief Executive Officer of the Limited
Partnership.
3. Other Business Activities. During the Term, Employee shall
not directly or indirectly engage in any other business activities or pursuits,
except activities in connection with charitable or civic activities, personal
investments, service as an executor, trustee or in other similar fiduciary
capacities and such other activities as are not inconsistent with his positions
with the Limited Partnership and do not interfere with the performance of
Employee's duties, responsibilities and obligations pursuant to this Agreement.
Employee may serve, with the consent of the Chairman of the Limited
Partnership, as a member of the board of directors of organizations not in
competition with the Limited Partnership.
4. Compensation.
(a) Salary. During the Term, the Limited Partnership shall
pay Employee, and Employee hereby agrees to accept, as compensation for all
services rendered hereunder and for Employee's covenant not to compete as
provided for in Section 9 hereof, a base salary (the "Base Salary"), at an
annual rate as follows:
(1) $115,000 through December 31, 1995;
(2) $130,000 from January 1, 1996 through December 31,
1996;
(3) $155,000 from January 1, 1997 through December 31,
1997; and
(4) $180,000 from January 1, 1998 through December 31,
1998.
Payment of the Base Salary shall be made by check in the same time intervals as
the Limited Partnership routinely pays its other executive employees but in no
case less frequently than once per month. All applicable income, social
security and other taxes and charges which are required by law to be withheld
by the Limited Partnership or which are requested to be withheld by Employee,
shall be deducted from the Base Salary in accordance
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with the Limited Partnership's normal payroll practice for its salaried
executives from time to time in effect.
(b) Incentive Bonus. The Limited Partnership may, at the
discretion of the Board of Directors of the General Partner, for calendar year
1995, pay to Employee an incentive bonus based upon the achievement of certain
performance goals with respect to the period beginning May 31, 1995 and ending
December 31, 1995. Such incentive bonus, shall be paid on or before March 31,
1996. For each of calendar years 1996, 1997 and 1998, Employee shall also be
paid an incentive bonus. Such incentive bonus shall be calculated as the lesser
of:
(A) net income taxes for the year(1) (as determined by the
independent auditors of the Limited Partnership in accordance
with Generally Accepted Accounting Principles consistently
applied) divided by $6,200,000 for 1996; $10,500,000 for
1997; and $15,000,000 for 1998, with the resulting fraction
multiplied by $78,000 for 1996; $96,875 for 1997; and
$117,000 for 1998; or
(B) 1996 - $78,000
1997 - $96,875
1998 - $117,000
Such incentive bonus earned for calendar years 1996, 1997, or
1998 shall be paid on or before March 31 of the next
succeeding year.
5. Stock Option Plan. In the event that the Limited
Partnership or any successor entity adopts a stock option plan (other than the
current 1994 Award Units Plan), or in the event any stock option plan is
offered to the Limited Partnership or successor entity employees by a parent
organization (within the meaning of Rule 12 b-2 under the Securities Exchange
Act of 1934), Employee shall be entitled to participate in such stock option
plan.
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1. In determining net income before taxes independent auditors shall
exclude any deductions to net income attributable either to intercompany
management fees (other than reimbursement for actual expenses including the out
of pocket expenses for such affiliate) or to any bonus payable to Employee.
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6. Benefits and Expenses.
(a) Benefits. Employee shall be entitled to participate in
such benefit plans and programs, including pension, hospitalization, medical
and dental insurance, life and disability insurance, and vacation, as are made
available to the executive employees of the Limited Partnership from time to
time during the Term.
(b) Expenses. Employee shall be reimbursed by the Limited
Partnership for all reasonable out-of-pocket expenses, including travel and
entertainment expenses, incurred by him in furtherance of the performance of
his duties and responsibilities hereunder upon submission to the Limited
Partnership of receipts supporting such expenses.
(c) Automobile. The Limited Partnership will provide Employee
with a car allowance of Six Hundred Dollars ($600.00) per month and reimburse
Employee for gasoline and oil expenses for his automobile upon submission to
the Limited Partnership of receipts supporting such expenses.
7. Confidentiality/Non-Disclosure. Employee recognizes and
acknowledges that the Proprietary Information (as hereinafter defined) of the
Limited Partnership is a valuable, special and unique asset of the Limited
Partnership. As a result, both during the Term and thereafter, Employee shall
not, without the prior written consent of the Limited Partnership, for any
reason, either directly or indirectly, divulge to any third party or use for
Employee's own benefit, or for any purpose other than the exclusive benefit of
the Limited Partnership, any and all confidential, proprietary, business or
technical information, or trade secrets of the Limited Partnership which are
revealed, obtained or developed in the course of Employee's employment with the
Limited Partnership (the "Proprietary Information"). Such Proprietary
Information shall include, but shall not be limited to, marketing and
development plans and efforts, cost information, pricing information, marketing
methods and plans, identities of dealers, the Limited Partnership's
relationship with actual or potential dealers, and any other confidential
information relating to the business of the Limited Partnership; provided,
however, that nothing herein contained shall restrict Employee's ability to
make such disclosures during the course of his employment as may be necessary
or appropriate to the effective and efficient discharge of his duties or as
such disclosures may be required by law; and further provided, that nothing
herein contained shall restrict Employee from divulging or using for his own
benefit or for any other purpose any
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Proprietary Information which is readily available to the general public so
long as such information did not become available to the general public as a
direct or indirect result of Employee's breach of this Section 7. The
proscriptions of this Section 7 shall not apply to Employee's disclosure of
information of the Limited Partnership to his independent legal counsel in
connection with the negotiation or enforcement of this Agreement, provided
Employee directs such counsel to maintain the confidentiality of such
information.
8. Property of Limited Partnership. All Proprietary
Information and Developments shall be and remain the sole property of the
Limited Partnership. During the Term of this Agreement, Employee shall not
remove from the Limited Partnership's offices or premises any documents,
records, notebooks, files, correspondence, reports, memoranda or similar
materials containing information of the type identified in Section 7 hereof, or
other materials or property of any kind unless necessary or appropriate in
accordance with his duties and responsibilities and, in the event that such
materials or property are removed, all of the foregoing shall be returned to
their proper files or places of safekeeping as promptly as possible after the
removal shall serve its specific purpose. Employee shall not make, retain,
remove and/or distribute any copies of any of the foregoing for any reason
whatsoever except as may be necessary in the discharge of his assigned duties
and shall not divulge to any third person the nature of and/or the contents of
any of the foregoing or of any other oral or written information to which he
may have access or with which for any reason he may become familiar, except as
disclosure shall be necessary in the performance of his duties; and upon the
termination of his employment with the Limited Partnership, he shall leave with
or return to the Limited Partnership, all originals and copies of the foregoing
then in his possession, whether prepared by Employee or by others. The
proscriptions of this Section 8 shall not apply to Employee's disclosure of
information of the Limited Partnership to his independent legal counsel in
connection with the negotiation or enforcement of this Agreement, provided
Employee directs such counsel to maintain the confidentiality of such
information.
9. Covenant Not to Compete.
(a) Employee shall not, during the Term, anywhere within the
United States of America or in any other location where the activities of
Employee would, in the judgment of the Board of Directors of the General
Partner, be competitive with the automotive finance business of the Limited
Partnership, other
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than the "prime" automotive finance business should the Limited Partnership
elect to engage in this business sector in the future, do any of the following,
directly or indirectly, without the prior written consent of the Limited
Partnership:
(1) solicit, either directly or indirectly, automotive
finance business, other than prime automotive finance
business, from any dealer with whom the Limited Partnership
shall have dealt at any time during the one (1) year period
immediately preceding the effective date of Employee's
termination;
(2) discourage or attempt to discourage any dealer with whom
the Limited Partnership shall have dealt at any time during
the one (1) year period immediately preceding the effective
date of Employee's termination from doing business with the
Limited Partnership;
(3) influence or attempt to influence any person to either
(i) terminate or modify his employment, consulting, agency,
distributorship or other arrangement with the Limited
Partnership, or (ii) employ or retain, or arrange to have any
other person or entity employ or retain, any person who has
been employed or retained by the Limited Partnership as an
employee, salesman, consultant or agent of the Limited
Partnership at any time during the one (1) year period
immediately preceding the effective date of Employee's
termination if the actions enumerated in clauses (i) and (ii)
would negatively affect the business and/or operations of the
Limited Partnership or the General Partner.
(b) The Limited Partnership shall have the right, but not the
obligation, to require Employee, for a six month period of time following the
termination of Employee's employment (for whatever reason), anywhere within the
United States of America or in any other location where the activities of
Employee would, in the judgement of the Board of Directors of the General
Partner, be competitive with the automotive finance business of the Limited
Partnership, including the "prime" automotive finance business if the Limited
Partnership is engaged in such business upon the date of termination of
Employee's employment, not to engage in the conduct proscribed by Section
9(a)(1) (except that Employee also shall not be permitted to solicit prime
automotive finance business), (2) and (3) by payment to Employee, over the
extended covenant period, of fifty percent (50%) of the amount paid to Employee
(as reflected in Employee's W-2) by the Limited
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Partnership in the full calendar year immediately preceding Employee's
termination. Any payments required by this Section 9(b) shall be paid by check
in the same time intervals as the Limited Partnership routinely pays its
executive employees but not less frequently than once per month. The Limited
Partnership's option to extend Employee's covenant not to compete may be
exercised only by providing Employee a minimum of one hundred twenty (120) days
written notice. Any exercise of the option shall be irrevocable.
(c) If the employment of Employee shall either expire
pursuant to Section 1 hereof, or shall be terminated pursuant to Section 10 of
this Agreement, Employee shall not, for a one (1) year period of time following
such termination, employ or retain, or arrange to have any other person or
entity employ or retain, any person who has been employed or retained by the
Limited Partnership any time during the one (1) year period immediately
preceding the effective date of Employee's termination.
10. Termination. This Agreement may be terminated during the
Term upon the occurrence of any of the events described in this Section 10.
Upon termination, Employee shall be entitled to such compensation and benefits
as are described in this Section 10.
10.1 Termination for Disability.
(a) In the event of the disability of the Employee such that
Employee is unable to perform his duties and responsibilities hereunder to the
full extent required by this Agreement by reason of illness, injury or
incapacity for a period of more than one hundred eighty (180) consecutive days
or for a cumulative period of one hundred eighty (180) days within a twelve
(12) month period ("Disability" or "Disabled"), this Agreement may be
terminated by the Limited Partnership.
(b) In the event of a termination of Employee's employment
pursuant to Section 10.1(a), Employee will be entitled to receive (i) all
accrued but unpaid (as of the date of such termination) Base Salary and
Benefits and other forms of compensation and benefits payable or provided in
accordance with the terms of any then existing Limited Partnership compensation
or benefit plan or arrangement, including payments prescribed under any
disability benefit or life insurance plan or arrangement in which Employee is a
participant or to which employee is a party as an employee of the Limited
Partnership ("Other Compensation"), and (ii) an amount as calculated in Section
10.3. Except as specifically set forth in this Section
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10.1(b), the Limited Partnership shall have no liability or obligation to
Employee for compensation or benefits hereunder by reason of such termination.
(c) For purposes of this Section 10.1, except as hereinafter
provided, the determination as to whether Employee is Disabled shall be made by
a licensed physician selected by Employee and shall be based upon a full
physical examination and good faith opinion by such physician. In the event
that the Board of Directors of the General Partner disagrees with such
physician's conclusion, the Board of Directors of the General Partner may
require that Employee submit to a full physical examination by another licensed
physician selected by Employee and approved by the Board of Directors of the
General Partner. If the two opinions shall be inconsistent, a third opinion
shall be obtained after full physical examination by a third licensed physician
selected by Employee and approved by the Board of Directors of the General
Partner. The majority of the three opinions shall be conclusive.
10.2 Termination by Death. In the event that Employee dies
during the Term, Employee's employment shall be terminated thereby and the
Limited Partnership shall pay to Employee's executors, legal representatives or
administrators an amount equal to all accrued but unpaid (as of the date of
such termination) Base Salary, Benefits and Other Compensation. Except as
specifically set forth in this Section 10.2, the Limited Partnership shall have
no liability or obligations hereunder to Employee's executors, legal
representatives, administrators, heirs or assigns or to any other person
claiming under or through him by reason of death to pay any further Base
Salary, Benefits or Other Compensation as set forth herein.
10.3 Termination for Cause.
(a) The Limited Partnership may terminate this Agreement at
any time for "cause" upon written notice to Employee, which termination shall
become effective on the date specified in such notice. For purposes of this
Agreement, "cause" shall mean: (i) any material breach by Employee of any of
his obligations under Sections 7, 8, or 9 of this Agreement; (ii) failure by
Employee to perform satisfactorily the duties assigned to him pursuant to this
Agreement; (iii) Employee's conviction of a felony or misappropriation of
assets of the Limited Partnership for personal use; (iv) Employee's willful
engagement in conduct materially injurious to the economic interests or
reputation of the Limited Partnership; or (v) Employee's other gross misconduct
or insubordination. Except in
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the case of Section 10.3(a)(i) and (iii) Employee shall be entitled to cure his
performance within thirty (30) days after written notice from the Chairman of
the Board of Directors of the Limited Partnership. In the event a cure is not
effected, Employee shall be entitled to an opportunity to be heard by the Board
of Directors of the Limited Partnership.
(b) In the event of a termination of Employee's employment
pursuant to Section 10.3(a), Employee shall be entitled to receive all accrued
but unpaid (as of the date of such termination) Base Salary, Benefits and Other
Compensation, and all Base Salary, Benefits and Other Compensation shall then
cease at the time of such termination except as set forth in Section 10.3(c).
(c) In the event of a termination of Employee's employment
pursuant to clause (ii) of Section 10.3(a), Employee shall also be entitled to
receive an amount equal to his annual Base Salary (at the rate then in effect
at the time of such termination) such amount to be paid in a lump sum (less
mandatory withholdings) on the tenth day following Employee's termination.
10.4 Termination By Employee For Good Reason.
(a) Employee may terminate this Agreement at any time for
Good Reason (as defined below) effective upon the date designated by Employee
in written notice of his termination of employment pursuant to this Section
10.4(a); provided, that the effective date of such termination shall not be
less than ninety (90) days after such notice is given, unless the Board of
Directors of the General Partner declares such effective date to be earlier
than that designated by Employee, which such Board shall be entitled to do (but
not earlier than the date such notice is received). For purposes of this
Agreement, Good Reason shall mean a material breach by the Limited Partnership
of its obligation under this Agreement, including, but not limited to, the
following: (i) the failure by the Limited Partnership to pay Base Salary or any
other form of compensation or benefit to be paid or provided to Employee
hereunder, which failure is not cured by the Limited Partnership within ten
(10) days after the Limited Partnership's receipt of written notification from
Employee of such failure; and (ii) any material breach, not encompassed within
clause (i) of this Section 10.4(a), of the obligations of the Limited
Partnership under this Agreement which breach is not cured within thirty (30)
days after the Limited Partnership's receipt of written notification from the
Employee of such material breach.
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(b) In the event of a termination of Employee's employment
pursuant to Section 10.4(g), Employee shall be entitled to receive all accrued
but unpaid (as of the date of such termination) Base Salary, Benefits and Other
Compensation. Employee shall also be entitled to receive an amount equal to the
remaining unpaid balance of his Base Salary for the full remaining term of this
Agreement at the time of termination, such amount to be paid over the
applicable period at times corresponding to the Limited Partnership's normal
payroll periods for executive officers as if no such termination had occurred.
Except as specifically set forth in this Section 10.4(b), all Benefits and
Other Compensation shall then cease at the time of such termination.
10.5 Successor Party. The Limited Partnership shall require
any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Limited Partnership, by agreement in form and substance satisfactory to
Employee, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Limited Partnership would be required to
perform it. If no such agreement prior to or simultaneously with the
effectiveness of any such succession is executed and delivered to Employee,
such failure shall constitute a material breach of this Agreement.
11. Survival of Provisions. The rights and obligations of
Employee pursuant to Sections 7, 8, 9, 10 and 14 of this Agreement shall
survive the termination of Employee's employment hereunder.
12. Successors and Assigns. This Agreement shall insure to
the benefit of and be binding upon the Limited Partnership and Employee and
their respective successors, executors, administrators, heirs and/or permitted
assigns; provided, however, that neither Employee nor the Limited Partnership
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other parties
hereto, except that, without such consent, the Limited Partnership may assign
this Agreement to any successor to all or substantially all of its assets and
business by means of liquidation, dissolution, merger, consolidation, transfer
of assets, or otherwise, provided that such successor assumes in writing all of
the obligations of the Limited Partnership under this Agreement.
13. No Conflicting Agreements. Employee represents to the
Limited Partnership that (i) Employee is not currently under
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contract to provide services to any other party or entity; (ii) the execution,
delivery and performance of this Agreement by Employee will not conflict with
any other agreement to which Employee is bound or to which Employee is a party;
(iii) Employee is not currently bound by any form of restrictive covenant which
would restrict or limit the performance of his duties pursuant to this
Agreement. Upon the execution and delivery of this Agreement by each of the
parties hereto, that certain Offer of Employment Letter dated May 6, 1994
between Employee and the Limited Partnership shall be superseded and of no
further force or effect.
14. Employee Benefits. This Agreement shall not be construed
to be in lieu of or to the exclusion of any other rights, benefits and
privileges to which Employee may be entitled as an employee of the Limited
Partnership under any requirement, pension, profit-sharing, insurance, hospital
or other plans or benefits which may now be in effect or which may hereafter be
adopted.
15. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, or hand delivery, addressed as
follows or to such other address as any party may from time to time duly
specify by notice given to the other party in the manner specified above:
If to Employee:
Xxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
If to Limited Partnership:
National Auto Finance Company, L.P.
000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
16. Entire Agreement; Amendments; Conflicts. This Agreement
contains the entire Agreement and understanding of the parties hereto relating
to the subject matter hereof, and merges and supersedes all prior discussions,
agreements and understandings of every nature between the parties hereto
relating to the employment of Employee with the Limited Partnership. This
Agreement may not be changed or modified, except by an agreement in writing
signed by both of the parties
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hereto. In the event of any conflict between the terms of this Agreement and
the 1994 Awards Units Plan offered by the Limited Partnership, the terms of
this Agreement shall control.
17. Waiver. The waiver of the breach of any term or provision
of this Agreement shall not operate as or be construed to be a waiver of any
other or subsequent breach of this Agreement.
18. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida, excluding its
choice of law provisions.
19. Invalidity. In case of any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the validity of any other provision of this
Agreement, and such provision(s) shall be deemed modified to the extent
necessary to make it enforceable.
20. Section Headings. The section headings in this Agreement
are for convenience only. They form no part of this Agreement and shall not
affect its interpretation.
21. Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and legal holidays; provided, however, that if the final day of any
time period falls on a Saturday, Sunday or day which is a holiday in the State
of Florida, then such final day shall be deemed to be the next day which is not
a Saturday, Sunday or legal holiday.
22. Specific Enforcement. Employee acknowledges that the
restrictions contained in Sections 7, 8, and 9 hereof are reasonable and
necessary to protect the legitimate interests of the Limited Partnership and
its affiliates and that the Limited Partnership would not have entered into
this Agreement in the absence of such restrictions. Employee also acknowledges
that the nature of both his services to the Limited Partnership and the
obligations undertaken by Employee in Sections 7, and 8, and 9 hereof are
unique and that any breach by him of Sections 7, 8, and 9 hereof will cause
continuing and irreparable injury to the Limited Partnership for which monetary
damages would not be adequate remedy. In the event of such breach by Employee,
the Limited Partnership shall have the right to specific enforcement of the
provisions of Sections 7, 8, and 9 of this Agreement, or injunctive or other
relief in any court, and this Agreement shall
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not in any way limit remedies of law or in equity otherwise available to the
Limited Partnership. In the event that the provisions of Sections 7, 8, and 9
hereof should ever be adjudicated to exceed the time, geographic, or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, or other limitations permitted by applicable law.
23. New Auto Finance Entities. If National financial
Corporation, National Auto Finance Company L.P. or National Auto Finance
Corporation or any successor entities thereto form, during the Term, one or
more entities intended to engage either in the business of "D" grade automobile
financing or substandard automobile financing utilizing primarily referrals
from financial institutions, and Employee wishes to participate in any such
entities, Employee shall be offered without charge, two and one half percent
(2.5%) of any such entities.
24. Arbitration. Any controversy or claim arising out of or
relating to Section 10 hereof, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by this
Arbitration may be entered in any court having jurisdiction thereof. This
arbitration shall be heard by a single Arbitrator, and shall be conducted in
Boca Raton, Florida.
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IN WITNESS WHEREOF, the parties hereto have executed or
caused this Agreement to be duly executed on the date first above written.
WITNESS: EMPLOYEE:
/s/ Xxx X. Xxxxxx
------------------------ --------------------------------------
Xxx X. Xxxxxx
ATTEST: LIMITED PARTNERSHIP:
NATIONAL AUTO FINANCE COMPANY L.P.
By: /s/ Xxxx X. Xxxxxxx
------------------------ -----------------------------------
Xxxx X. Xxxxxxx
Chairman
National Auto Finance Corporation
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